What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is paid when buying a home worth more than £250,000 in England and Northern Ireland. This was changed as part of the mini-Budget announced in September 2022. Previously Stamp Duty applied to homes over £125,000.
Stamp duty was replaced by the Land Transaction Tax in Wales and the Land and Buildings Transaction Tax in Scotland. These follow a similar blueprint, with a set rate between each price band. The cost is relative to the price of the house, with different rates for each proportion of a home’s cost.
Read on for advice about paying stamp duty when buying a house. This includes relief for first-time buyers and the fees for second homeowners.
How Much Is Stamp Duty?
The amount of Stamp Duty Land Tax you’ll have to pay is relative to your house price and country within the UK. It’s based on a series of tax bands on different portions of your total house price. It's important to factor this into the total cost of buying a house.
As an example, if you’re a homeowner buying a house for £300,000, the first £250,000 of this house has a 0% rate. This means you only pay Stamp Duty on the remaining £50,000.
Stamp Duty Tax Rates
| Portion of House Price | Stamp Duty Rate |
|---|---|
| Up to £250,000 | 0% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| £1.5 million+ | 12% |
For a quick way to work out your stamp duty, use our Stamp Duty Calculator.
Compare and Save on Your Move
Save 70% off the Cost of Your House Move Today!
Stamp Duty for Second Homes
Homebuyers pay an extra 3% on any second homes above £40,000 in England and Northern Ireland. This includes buy-to-let properties and holiday homes. In Scotland and Wales, the additional rate is 4%.
This additional tax does not apply to caravans, mobile homes or houseboats
This higher rate is calculated by adding the percentage to every band of the normal stamp duty rates. For example, if you purchased a £300,000 second home, the first £250,000 of this house now has a 3% rate, meaning you'll pay £7,500 on that first portion.
The next tax band is 8% between £250,001 and £300,000, meaning you pay £4,000 on this portion of the total house price. The next tax So in total, a £11,500 fee.
Find the stamp duty rates for second homes below.
Second Home Stamp Duty Rates
| House Price | Higher Stamp Duty Rate |
|---|---|
| Up to £250,000 | 3% |
| £250,001 to £925,000 | 8% |
| £925,001 to £1.5 million | 13% |
| £1.5 million+ | 15% |
The stamp duty surcharge for second homes may apply when you buy a residential property but the sale of your current home is delayed. This technically means you will temporarily own two properties.
You can apply for a refund for this higher rate if you sell your previous home within 3 years. You'll need to file for the refund within 3 months of selling or within a year of filling out your self-assessment tax return.
You can get more information and download the request form here, and apply for a refund online or via post.
Compare and Save on Your Move
Save 70% off the Cost of Your House Move Today!
Stamp Duty in Wales - Land Transaction Tax
Land Transaction Tax (LTT) replaced Stamp Duty in Wales in 2018. The main difference is the 0% rate applies to houses up to £225,000 in Wales, compared to the £250,000 0% for stamp duty.
For more information read: Stamp Duty in Wales: The Land Transaction Tax Explained
Land Transaction Tax Rates
| House Price | Land Transaction Tax Rate | Additional Property Rate |
|---|---|---|
| Up to £225,000 | 0% | 4% |
| £225,000 - £400,000 | 6% | 7.5% |
| £4000 to £750,000 | 7.5% | 9% |
| £750,001 to £1.5 million | 10% | 14% |
| £1.5 million+ | 12% | 16% |
Homebuyers in Wales can use our cost of moving house calculator to get an idea of their LTT costs.
Stamp Duty in Scotland - Land and Buildings Transaction Tax
Stamp duty was replaced by the Land and Buildings Transaction Tax (LBTT) in 2015. First-time buyers in Scotland won't enjoy the same £300,000 Stamp Duty relief as in England. Currently, there is no change to LBTT following the government's mini-budget.
That said, recent changes mean that the threshold for LBTT rates has increased from £145,000 to £175,000. This means that any first-time buyer in Scotland will pay no duty on houses up to £175,000.
Land and Buildings Transaction Tax Rates
| House Price | LBTT Rate | LBTT Additional Property Rate |
|---|---|---|
| Up to £145,000 | 0% | 3% |
| £145,001 to £250,000 | 2% | 5% |
| £250,001 to £325,000 | 5% | 8% |
| £325,001 to £750,000 | 10% | 13% |
| £750,001+ | 12% | 15% |
Compare and Save on Your Move
Save 70% off the Cost of Your House Move Today!
When Do You Pay Stamp Duty?
Your licensed conveyancer will likely deal with the stamp duty payment for you. However, it is something you can do yourself. Either way, it is your responsibility to ensure it is paid on time.
You may be subject to penalties and added interest if you do not pay SDLT within 30 days of buying your new home.
Do First-Time Buyers Pay Stamp Duty?
Due to ‘first-time buyer relief’, first-time buyers won't pay stamp duty on certain homes in the majority of the UK.
In England or Northern Ireland, first-time buyers won’t have to pay stamp duty on properties up to £425,000. This has also changed as a result of the mini-budget in September 2022, rising from £300,000. For those living in Scotland, it’s for properties worth up to £175,000.
There is no relief from Land Transaction Tax for first-time buyers in Wales. However, you’re only liable to pay LTT when the property costs more than £225,000.
Who is Classed as a First-Time Buyer?
To be a first-time buyer, you must never have owned a residential property in the UK or abroad. If you previously inherited a house, you will no longer be considered a first-time buyer. This is because you will have legally owned property.
If your name is on the deeds of any property, even one you only have a share in, you will not be considered a first-time buyer.
Compare and Save on Your Move
Save 70% off the Cost of Your House Move Today!
FAQs
Who Doesn't Pay Stamp Duty?
You won't have to pay any stamp duty if your property costs less than the threshold of £250,000.
Other exemptions include:
- If you're transferring the ownership of a property and no payment is made.
- If a property is left to you in a will.
- If the property is transferred as a result of a divorce or dissolving of a civil partnership.
- If you're eligible for first-time buyer's relief
Can You Get First-Time Buyer Relief on a Buy-to-Let Property?
No. First-time buyer relief is only for those buying a property that they intend to live in.
Do You Have to Pay Stamp Duty When Purchasing a Shared Ownership Home?
Yes. You will have the option of paying the stamp duty fee either upfront or in stages. If you’re a first-time buyer purchasing a shared ownership home, you will be entitled to first-time buyer relief.
Next Steps of Buying a House
This article is part of our home buying guide. In the next article, we break down the time scale of buying a house, from mortgage application to completion day. Find out more read how long does it take to buy a house.
